The Central Bank of Argentina (BCRA) increased its reference interest rate by 800 basis points today, Thursday, from 52% to 60%, the entity informed in a press release.
The monetary entity made its seventh monetary policy rate increase this year in the context of high inflation, which accumulated 36.2% in the year’s first half.
“The economy faces an increase in price volatility in a context of financial fluctuation not correlated with the country’s macroeconomic fundamentals,” said the BCRA.
The increase in the interest rate seeks to “contribute to preserving financial and exchange rate stability” while contributing to “a consistent decrease in inflation”, added the entity in the official communication.
In Argentina, the monetary policy rate is governed by the quotation of the 28-day Liquidity Bills (Leliq), which are interbank financial instruments.
The monetary authority announced that in the last weeks, “coordination efforts have been intensified” with the economic authorities “to establish a financial strategy that will make it possible to reduce the monetary financing to the Treasury progressively.”
In addition, the Central Bank increased the minimum limits of the rates offered by the fixed term deposits (savings instruments) of individuals to 61% per annum.
For private sector savings instruments, the minimum interest was set at 54%, the entity informed.
“The Central Bank will continue to calibrate the policy interest rate in the framework of the ongoing monetary policy normalization process, paying special attention to the past and prospective evolution of the general price level and the dynamics of the exchange market,” the statement added.
With information from Xinhua